Tag Archives: inventory

LEAD LIKE A BOSS: MASTER GLOBAL SUPPLY CHAIN SHIFTS

In light of COVID-19, is the status quo still the best way, or is it time to move away from Globalisaton to embrace Localisation and its benefits? Tania Seary explains what such a gargantuan shift would entail and how you can master it.


The supply chain strategy paradigms we have held close and true for decades are being challenged. The questions are complex, important, urgent and without easy answers.

Consider some of the traditional supply chain paradigms such as lean manufacturing, just-in-time inventory management and extended payment terms. In light of COVID-19, is the status quo still the right way to operate? Take supplier payment terms, for example. Maximising working capital has been a top priority for as long as we can remember. Now, given the rise in bankruptcies and the clear connection between supplier viability and business continuity, many procurement leaders are taking a step back and thinking more about their suppliers’ cash flow in addition to their own.

These paradigm shifts are substantial but pale in comparison to the potential changes around supply chain globalisation.

Supply Chain Globalisation: Is It Time to Localise?

For decades, supply chain strategies have revolved around moving production and sourcing to low-cost geographies. This traditional low-cost sourcing mindset affects everything from lead times, supplier selection, production, quality, margins and more.

Today, leaders everywhere are asking if their heavy reliance on global suppliers is less strategic and more of a risk. When Procurious asked more than 600 procurement and supply chain professionals where COVID-19 had the biggest impact, 21% said logistics and transportation slowdowns or delays. Over one in four cited lack of available supply due to production downtimes and shutdowns. Ninety-seven percent said they were impacted in some capacity.

Pressure and attention are heightened when disruptions cause shortages to critical supplies such as ventilators or personal protective equipment, direct materials and popular merchandise. Beyond the headlines, there’s also a significant impact to the services supply chain. When critical outsourced services, including customer support, security and IT, were suddenly forced to go remote, we saw a corresponding rise in risks related to quality, fraud and compliance.

When a supply chain disruption occurs, it is impossible to control what is happening, especially when the product or service you rely on is thousands of miles away and completely inaccessible. What business leaders can control, however, is from where they source. That explains why over one-third of the profession is currently planning to either expand their supply base or shrink their global supply chain and depend more upon local suppliers.

The idea of realigning supply chains is not new. Questions about globalisation and the heavy reliance on China have been bubbling for years. Macro and geo-political events such as the China-U.S. trade war and Brexit brought the topic to the surface. COVID-19 caused it to boil over. Forbes even went as far as to say COVID-19 will become the final curtain on China’s nearly 20-year role as the world’s leading manufacturer.

Our research shows that over half of supply chain and procurement professionals believe Fortune 500 companies should reduce globalisation by localising supply chains and bringing manufacturing back home. But as most industry veterans recognise, that shift is far easier said than done.

The Catch-22 for Supply Chain & Procurement

Surprisingly, 27% of executives plan to stay the course and not make any meaningful post-pandemic strategy shifts. Many of them probably want to alter approaches, but recognize the inherent complexities and costs associated with doing so.

Understandably, most executives have never before experienced a supply chain disruption to this extent. While localisation seems like an appealing strategy to minimise future risks and boost the local economy, it’s far from a quick and easy fix. The obstacles are plenty.

Overcoming the deep reliance on low-cost sourcing is the first challenge. The second is production complexity. Technology gets more innovative, personalised and sophisticated by the day. It would be nearly impossible for a single manufacturer to hold all the technical capabilities and expertise to produce these products 100% in-house. To keep up, manufacturers outsource critical components to others, who outsource to sub-suppliers and so on.

Breaking this chain, while simultaneously bringing production closer to home and swaying the board to accept lower margins, will require executives and procurement teams to perform in a new reality.

Of course, there are clear benefits of going local. The end-to-end supply chain impact on carbon emissions is more than five times that of companies’ direct operations. Localisation optimises and shortens the supply chain network, lowering emissions.

In addition, sustainability performance is proven to impact the bottom-line. According to the World Economic Forum, sustainable procurement practices can reduce supply chain costs by 9 – 16%. On a larger scale, shifts toward localisation strengthen national and local economies, support the job market and, in many cases, reduce enterprise risk.

What’s to Come?

The decision to move production requires long-term planning and commitment. It won’t and can’t happen overnight.

Companies planning to make seismic strategy shifts like localisation require proper technology investments. Over 90% of companies are already using at least one Industry 4.0 technology, including blockchain, artificial intelligence, internet of things and more. While adoption of blockchain is still relatively low, the network promises to play a pivotal role in whatever changes come next.

The following 6 – 12 months will be crucial for every company and require a great amount of flexibility and adaptability. It’s impossible to predict (with 100% accuracy, at least) what’s next. Anyone that tells you differently is out of their mind. My advice to C-suites and supply chain and procurement leaders is to remain agile, invest, lean on your peers and prepare for anything.

Quick Read – 4 Steps To Get Post-COVID Ready

How can organisations preserve integrity of their supply chains, protect their workforce and prepare to ramp up operations in the post-COVID world? Here are four quick steps.


At some point soon, the worst of the COVID impact will have passed. And so, organisations need to work now to preserve the integrity of their supply chains, protect their workforce, and prepare to ramp up operations in the post-COVID world.

With lockdown restrictions easing across the globe, returning to a regular work schedule is imminent. Some of the basic near-term measures include:

  • Scanning body temperature at work site entrances
  • Reorganising the workplace to minimize common touchpoints.
  • Implementing effective disinfectant processes
  • Training employees on workplace hygiene practices
  • Developing contingency to respond to suspected infections

These can be achieved through a four-step process:

1. Plan a Phased Reintroduction to Worksites

A large number of workers returning to a shared worksite pose a significant risk of the virus spreading in the workplace. The higher the number of workers the higher the risk of contagion. Remember that managing the number of workers entering a worksite will be critical in ensuring overall workplace health in a post-COVID world.

2. Revisit the Workplace Setup

Granting worksite access to employees doesn’t essentially mean removing all the restrictions imposed during the COVID-19 outbreak. You will still need to closely follow all the government regulations pertaining to employee gatherings, social distancing and workplace hygiene best practices. And, it’s likely that the pre-COVID working environment will be unsuitable for these new restrictions to be implemented.

3. Transport Inventory and Operations to Non-Affected Areas

Many regions at the heart of several global supply chains have been severely affected by the COVID-19 pandemic. Sudden supply shortages from these regions or over-dependence on a single supplier for inventory in these regions may lead to operational delays.

Shifting inventory and production lines elsewhere or opting for local sourcing alternatives can help lower your risk exposure. Additionally, you can also start sourcing pre-approved inventory or raw-material substitutions from regions where a primary supplier has been impacted but a Tier 2 supplier is still operational.

4. Mobilise Support Structures for the Extended Enterprise

Proper technology can help you quantify the pandemic’s relative impact on contractors’ supply chains. Leverage advanced cloud-based workforce management platforms to collaborate with workers working on remote locations. Keep communication as consistent and frequent as possible to remediate pitfalls.

The Long-Term Landscape: How to Evolve Your Business

Short-term measures will provide businesses and supply chains with the much-needed foundation for proactive resilience. However, enterprises are steadily coming to terms with the fact that the COVID-19 pandemic has clearly and irreversibly transformed the future of supply chains. In order to ensure long-term pandemic-proofing of global supply chains, organisations need to take several measures.

These measures are outlined in Avetta’s recent whitepaper, What Happens After COVID-19? Download for free today.

The Three Fatal Flaws In Supply Chains

The pandemic exposed three fatal flaws in the way companies manage supply chains. Hear from IBM’s Takshay Aggarwal on how to recognise your supply chain flaws and be ready for the next disruption.


In 20 years of supply chain experience, I’ve never seen a supply and demand shock at the same time.

Yet COVID-19 hit, and instantly the just-in-time strategy fell on its face. 

All those Informed predictions about stock levels and deliveries were suddenly obsolete. 

That’s because consumer behaviour changed overnight. And it hit retailers hard.

Instead of looking trendy, we sought comfort. Purchases of sweatpants were up 80 percent in April, according to the New York Times.

Time travel

And who could have predicted the mass shift to online shopping and remote working? McKinsey estimates US e-commerce jumped forward 10 years in just three months

No wonder we’re all a bit dizzy. 

And as volatility went up, people focused on the basics – paying off debts and stashing cash to weather the storm. 

Suppliers and consumers were equally frustrated by empty shelves, never knowing when the next shipment was coming in.

The truth is, we had this disruption coming. The pandemic exposed three fatal flaws that were otherwise laying dormant in supply chains. 

  1. Single sourcing

It’s no secret many supply issues during the pandemic stemmed from an over-reliance on Chinese suppliers. When major industrial cities in China went into lockdown, production ground to a halt.

Companies developed a reliance on Asia by wanting the lowest cost at all costs. It didn’t matter where material came from, as long as it was at the right price.

  1. Low inventory

Who wouldn’t love a just-in-time supply strategy? It works wonderfully well, as long as you stay within a certain degree of volatility.

It’s cost effective, and ensures you aren’t left with mounds of unsold product taking up space.

But then a pandemic hits and volatility skyrockets. The result? A huge unmet demand for basic staples like flour and toilet paper. 

  1. Reliance on suppliers to manage inventory

Someone has to keep an eye on all that stock. Since retailers don’t want to, they pass that responsibility to suppliers.

The issue is those suppliers are also relying on suppliers, and if you don’t know who they are, you don’t know the extent of your supply chain weaknesses and risks. That’s why so many companies were caught off guard.

So where do we go next?

We’re already seeing a monumental shift in the way companies approach supply chain management.

The first trend is multi-sourcing, to make sure a chain is not dependent on a single point of failure.

The second, is planning for a higher degree of volatility. Because the world will continue to experience volatile events, like natural disasters, with greater intensity and frequency moving forward.  

And the third, is becoming risk balanced. Rather than the absolute lowest cost, companies are looking for a better balance between delivering value and managing supply risk.

What successful procurement will look like

All of these fatal flaws – and the new strategies emerging as a result – all point to one crucial need: end-to-end supply chain visibility.

It might sound like a dream, but it’s actually possible.

The most resilient companies are using control towers to keep eyes on the entire supply chain, and gain advanced warning to avoid disruption.

And I don’t mean the spreadsheets that people call ‘control towers.’ I mean genuine systems that pull in essential data from across departments and across suppliers. Without that total oversight, you’ll never have the visibility you need to make informed decisions. 

For example, IBM’s global supply chain uses IBM Sterling Control Towers so that we’re alerted to potential issues far earlier than our companies.

That gives us time to react, and avoid much of the disruption. 

Control towers can help you understand the next steps to take, so you’re much more resilient to shocks.

Embrace technology

Investing in control towers is the right way to start improving supply chain visibility. But you also need the right tech infrastructure to match.

For example, I’ve noticed retailers making great strides in becoming omnichannel. Without that seamless experience in store and online, companies risk becoming irrelevant in the next decade. 

The fact is, there are tools out there to help your company survive and thrive during this crisis. It’s truly an amazing time to be a supply chain leader, and with the right partner you can offer the answers your company sorely needs right now. 

Invest in the right technology and gain end-to-end visibility across your supply chain. You’ll spot opportunities, and you’ll be prepared the next time an ‘unprecedented’ event hits. 

IBM’s Takshay Aggrawal recently sat down with Procurious Founder Tania Seary to discuss end-to-end visibility, and how supply chain management will never be the same. Listen to their full discussion now.